Cloud-based consolidation commenced in earnest this month, when Consona, a leading provider of CRM and enterprise resource planning (ERP) software, announced the acquisition of on-demand ERP vendor Compiere for an undisclosed sum. The addition of Compiere's cloud-reference architecture is intended to elevate Consona's competitive stance in the world of cloud computing, according to executives of the two companies.

Compiere's architecture runs on an open-source stack, such as Java, Linux, JBoss, or PostgreSQL, and with a browser based on Google Web Toolkit. Its multitenant architecture runs on Amazon.com's Amazon Web Services and is considered flexible enough to allow automatic upgrades without retrofitting customizations. The company's open-source purity had been questioned in the past, due to a former reliance on Oracle's database systems; the latest iterations of Compiere's offerings now allow for the use of other databases.

Describing Compiere's platform as "the most state-of-the-art one that we've seen out there," Jeff Tognoni, Consona's chief executive officer, said the acquisition provides 120 percent of what we envisioned [for Consona]."

The deal, Tognoni added, precisely fits his vision for Consona's future: A move into cloud computing, he noted, has long been in the works for Consona, which primarily offers enterprise software for on-premises use.

"Our view is that [Compiere] is the leading open-source ERP firm in the world ," Tognoni said . "This acquisition is more [about] throw[ing] the ball down the field a little bit and try[ing] to take a leadership position in a developing market for cloud-based ERP."

Ray Wang, research analyst for enterprise strategy at Altimeter Group, says that Consona is "betting on the cloud and doesn't want to be dependent on any other vendor for its architecture. It wants the open-source approach." The software-as-a-service (SaaS) delivery model, he adds, simply became too compelling. "[The] hosting capabilities mean they [will now] have on-demand. They see that they must move to SaaS and this is one step toward completing the goal."

China Martens, senior analyst of enterprise software at The 451 Group, agrees. "Consona's primary interest in Compiere is in its underlying architecture," Martens says. She also notes, however, that Consona's interests extend to the paid version of Compiere's distribution ERP.

The deal may not pan out for everyone, Martens says. "There's been no mention of CRM or of Consona's long-term plans for Compiere's free Community Edition," she warns. "At the same time, Consona runs its own ERP and CRM businesses as mostly separate operations, so that tends to mean its ERP customers may make use of CRM functionality if it's included in the Consona ERP products they use."

In an interview with CRM magazine and destinationCRM, Tognoni confirms that Consona will continue to develop and produce Compiere products as well as provide on-premises systems. "We're going to continue…to move our on-premises [offerings] forward," he says. "We're not moving the entire company. We're still very much selling all our on-premises products. Our strategy doesn't really change with respect to those products."

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